2020 has been a great year for the crypto economy, with more companies and institutions than ever before the technology was implemented. Major announcements, such as PayPal’s decision to enables its users to buy and sell Bitcoin (BTC), have understandably dominated the headlines. However, crucial regulatory developments around the world have largely flown under the radar and arguably have even greater significance for crypto in the long run.

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The importance of clear regulatory frameworks cannot be overemphasized as patchy and inadequate legislation is a major barrier to companies looking for digital assets and distributed ledger technology. It is now clear that a number of jurisdictions in the European Union and Southeast Asia are at the forefront of the regulatory race, with clear taxonomies for digital assets – while the United States continues to catch up.

An important European development in 2020 was that of the EU proposal for a common legislative framework for crypto assets in the 27 Member States. The regulation on Markets in crypto assets, or MiCA, aims to provide legal certainty around the definitions of a number of types of digital assets and associated services, with a pilot regime for DLT market infrastructures coming soon.

Related: The EU is chasing the hottest trends in crypto and working to keep stablecoins and DeFi in check


A number of European states are even further ahead, with Germany proving to be one of the most progressive states in the European Union. As of January 2020, crypto asset custody is integrated into German Banking law as a regulated financial service requiring a special license from the German Federal Financial Regulator. As a result, many financial institutions are in an advanced stage of their digital asset offering roadmap, and more than 40 institutions have expressed interest when applying for a guardianship permit.

In August 2020, the German Ministry of Finance published a bill on electronic securities. This bill allows for the issuance of bearer digital bonds on a DLT infrastructure without the requirement of a paper certificate and introduces the definition and regulated financial service of a decentralized securities registry. The law is expected to be passed as early as the second quarter of 2021, signifying another important step towards a comprehensive framework for digital assets in the country.


Switzerland has established itself as a crypto-friendly state, providing clear guidance on digital assets from an early stage in the technology life cycle. Swiss parliamentarians arrived in September voted to pass a wide range of financial and corporate law reforms around DLT technology. These laws, which are likely to come into effect early next year, will further open the doors for digital asset adoption in the country as they update laws pertaining to digital securities trading, and the separation of crypto-based assets in the event of bankruptcy and create a new authorization category for “DLT trading facilities” (crypto exchanges).

Related: A Guide to Setting Up a Crypto Business in Switzerland


Other European jurisdictions have also presented strong legal frameworks for the regulation of digital assets, with Liechtenstein reportedly being the first country in Europe. to bring into law a whole new and expanded framework for the regulation of blockchain, digital ledger technology and tokens. The Tokens and Trustworthy Technology Service Providers Act, which came into effect on January 1, 2020, provides an innovative method for regulating blockchain technologies, which, instead of integrating blockchain and digital assets into existing legal frameworks, allows any right or asset to be packaged in a token, according to the Token Container Model.

The United States

Contrary to the clear legal frameworks being adopted across Europe, the US, the global financial leader, remains a notable laggard in providing comprehensive crypto regulations. This divergence is already having a noticeable impact on institutions’ adoption of digital asset opportunities, accelerating the roadmaps between institutions in jurisdictions where a clear licensing regime is in place. Layer one and layer two sofas, like Standard Chartered, BBVA and Gazprombank Switzerland, among others, all have publicly announced crypto-custody offerings in recent months and it is becoming clear that European banks have the potential to emerge as the foremost global crypto leaders.

This trend has not gone unnoticed by the US banks that currently dominate world markets. Once US regulators align and provide clear guidance to their banking sector, the market is likely to explode in the US as well. US regulators have taken the first steps towards such clarity with Congress this year introduction of the Crypto-Currency Act of 2020 in March, which provided some legal certainty in terms of defining types of digital assets and which regulator would be responsible for oversight.

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In terms of digital asset custody, a major step forward took place in July, with the Office of the Comptroller of the Currency issuing a letter authorizing a regulated financial institution to provide cryptocurrency custody servicesonce appropriate risk management processes and controls were in place.

However, other regulators in the US have largely remained silent, seemingly content to cede ground to jurisdictions in Europe and Asia. At the same time, rumors regulatory measures, such as the US Treasury’s ban on non-custodial wallets and the introduction of the Stable Law, which aims to make stablecoins illegal without the approval of relevant government agencies, creates a rather restrictive environment for digital assets.

If this lack of drive for constructive regulation and concrete guidance at the federal level continues, it will be interesting to see whether individual states take steps towards legislation for digital assets at the local level. For example, the move by San Francisco-based crypto exchange Kraken to move into the regulated space by obtaining a banking license Wyoming is an interesting precursor to what may come if federal authorities do not take swift and regulatory action.

While the signs are growing that U.S. regulators are becoming aware of the danger of falling behind in the race for the supremacy of digital assets, it is becoming increasingly clear that such a battle could already be lost, at least for this year.

The views, thoughts and opinions expressed here are the sole ones of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Johannes Kaske is Director of Sales and Business Development at Metaco, where he is responsible for leading the strategy and implementation of Metaco’s sales operations across Germany. Prior to joining Metaco, he worked for the Bavarian State Ministry of Digital Affairs, where he was responsible for the state government’s blockchain strategy and headed the Bavarian Center for Blockchain. Johannes graduated from ESADE Business School in Barcelona with a Master of Science in International Management.